A comparative analysis of the VAT threshold of South Africa and certain other countries

Abstract

The value-added tax threshold is a threshold that determines which businesses are exempt from the obligation to register for and collect value-added tax on their sales. It is important to set the threshold at the appropriate level, as value-added tax carries compliance and administrative costs. The registered taxpayer must charge output tax for taxable supplies and claim input value-added tax on taxable purchases. The value-added tax threshold is an important consideration for small businesses due to the compliance and administrative costs associated with complying with the provisions of the value-added tax legislation. South Africa’s value-added tax threshold is R1 000 000, and implemented more than fourteen years ago (Bell, Schoeman, and Nienaber 2018). As the backbone of the economy, the South African government must develop tax policies that’s support small businesses to promote economic growth and prosperity. With a cumulative inflation of 91.19% between 2009 and 2023, this research report argues that the value-added tax threshold provisions require re- examination. Where the research report’s objective is to answer the following research question: how does the value-added tax threshold of South Africa compare to those of certain other countries, and what improvements can be made to the value-added tax threshold of South Africa? This research report is a comparative study of the South African value-added tax threshold with certain other countries to determine how South Africa’s value-added tax threshold compares to those of other countries towards proposing improvements that may be made to the value-added tax threshold of South Africa.